This year’s sustainability trends forecast looks like the perfect storm (in a good way) of purposeful yet business opportunity-driven progress. Although Forrester analysts expected at least 10 companies to incur fines of $5 million or more, the long-term outlook for significant environmental impact is much better. Gartner researchers predicted that policymakers around the world will support nation-state commitments to invest tens of trillions of dollars in climate mitigation from 2025 to 2035. Driven by consumer demands and spurred by increasingly stringent regulations, the business sector has taken notice and take action to create a more sustainable future. Here is a summary of their investment priorities.
Obtain accurate, quality ESG data
Environmental, Social and Corporate Governance (ESG) standards and regulations are becoming a dominant force in the way organizations operate, affecting every part of the business. In the US, the SEC is slated to introduce more ESG regulations for investors, while the UK’s tax on plastic packaging is expected to transform global supply chains around the world. According to Deborah Kaplan, global head of sustainability at SAP Customer Success, collecting and making sense of tons of disparate data is the biggest challenge for organizations—regardless of where they are on the sustainability readiness spectrum.
“Companies need data transparency with granular precision across the entire value chain. They must act quickly as ESG frameworks and standards evolve, embedding sustainability metrics into every business process that are aligned with company strategy,” Kaplan said. “We’re seeing customers replace time-consuming, inaccurate manual approaches with a holistic management and reporting solution like SAP Sustainability Control Tower. It simplifies data visibility, enabling companies to capture, report and act on quality data across the value chain with built-in assurance and auditing capabilities.”
IDC analysts predict that by 2024, 30% of organizations will use ESG data management platforms to manage ESG KPIs through a centralized system of record for reporting purposes and operational support for real-time decision making. Within three years, these analysts said ESG performance will be seen as the top three factors in IT equipment purchasing decisions; over 50% of RFPs will include metrics on carbon emissions, material use and labor conditions.
Linked data provides organizational accountability
With Scope 3 emissions regulations increasing and constantly changing, organizational leaders have realized the value of connected data to track, report and reduce climate impact. Gartner researchers said that customer expectations of environmental and social sustainability will apply to the entire product life cycle, predicting that “buyers will speak to their wallets by only buying from companies and suppliers that demonstrate authentic delivery of commitments.” . The firm found that 67% of organizations intend to hold supply chain leaders accountable for defined environmental and social sustainability KPIs.
By next year, IDC analysts predicted that 80% of G2000 companies will collect their carbon data and report their enterprise-wide carbon footprint using quantifiable metrics, compared to 50% today. Gartner researchers said that by 2027, 50% of the top 10 consumer goods manufacturers will have “digital product passports” for at least one of their product categories. Essentially a digital thread, passports will track product carbon footprint, waste, liability and risk and more, sharing information across the company and with suppliers and regulatory agencies.
Sustainability translates as business currency
Sustainable business is much more than accounting for carbon emissions. Forrester expects five Fortune Global 200 companies to announce policies limiting sustainability travel this year. They did not see companies returning to business travel as usual, writing that “some are using [post-pandemic] reboot to re-evaluate existing travel practices by tracking travel emissions data.”
Monetary matters also lead to sustainable business norms. Under increased scrutiny from the SEC, Forrester analysts expected public companies to “link their sustainability goals to corporate policies aimed at driving environmentally sustainable behavior.” IDC analysts predicted that by 2026, sustainability-related regulations and crediting will drive more than 60% of global manufacturers to adopt product carbon footprint as a key metric to operationalize sustainability beyond reporting.
Innovating sustainable business models
Sustainability is good for business, and not just because it reduces the risk of regulatory compliance. Gartner researchers said the ability to effectively navigate the global regulatory environment and scale compliance systems will offer companies a significant competitive advantage. Urging business leaders to think ahead, these analysts predicted a “carbon turnaround” after “an intense period of innovation in climate mitigation technologies already underway, to be followed by approximately 20 years of deployment for scalable solutions and replacement of carbon-based technologies.”
Meanwhile, there are many short-term business outcomes from the sustainability wave. By next year, IDC analysts predict that a quarter of the world’s organizations will demonstrate responsible leadership by increasing their sustainability-related digital spending by more than 25% over 2022 levels. Within three years, they said , that 45% of G2000 organizations will operationalize integrated sustainability in the supply chain and effectively report impact data, enabling a 10% reduction in waste and improved competitive advantage.
As sustainability has evolved from tracking carbon emissions into company-wide commitments to achieving global imperatives, organizations of all kinds are finding themselves in the business of creating a healthier world. Surely this is an advance that will help us breathe a little easier and live longer.
Learn more about incorporating sustainability into your business operations to create a future with zero emissions, zero waste and zero inequality.